A) Total overhead cost =  

B) Cost drivers identified =  

C) Cost driver used for traditional costing method =  

D) How many units produced for each product =  

E) How much is the prime cost for each product =  

Using traditional costing, using direct labours as a cost driver, calculate: 

Total direct labour hours =

Calculate Overhead Absorption Rate (OAR)per labour hour =

Calculate overhead cost allocated per Product A, B and C =

Calculate overhead cost per unit for Product A, B and C =

 

Using Activity Based Costing, calculate: 

Overhead absorption rate for each cost driver =

Calculate overhead cost allocated per Product A, B and C =

Calculate overhead cost per unit for Product A, B and C =

 

Use profitability analysis for all products using : 

Traditional method =

ABC method =

4. Producing Sdn Bhd produces and sells three types of Machine, Machine A, Machine B and Machine C. Machine A Machine B Machine C Sales price per unit RM 800 RM 600 RM 400 Cost of direct material (per unit) 100 40 20 Production volume (unit) Cost of direct labour (per unit) Direct labour hour 100 40 20 7,200 17,200 27,200 47,200 97,200 127,200 The company's accountant has identified the following activities, budgeted cost pool and activity cost driver: Activity Engineering Machine setup Packaging Budgeted cost pool Activity cost driver RM 147,200 RM 520,000 Engineering hours Number of setups Machine operation RM 1,720,000 Total RM 97,200 RM 2,484,400 Machine hours Number of orders (package) The unit and transaction of actual activities for each product are shown in the following table: Activity cost driver Level of activity Product A Engineering hours 7,000 Number of setup 400 Machine hours 72,000 Number of orders 7,200 Product B Product C Total 9,720 120 120,000 11,940 120 28,660 640 140,000 332,000 12,000 14,000 33,200